European Union Legislation and Procurement Reform (Scotland) Act 2014: reference pack

9. Procurement Procedures

Types of Procedures

Open Procedure	Use freely
Restricted Procedure
Competitive Procedure with Negotiation	Use when justifiable
Competitive Dialogue
Innovation Partnerships
Negotiated Procedure Without Prior Publication	Use only in the permitted instances

The Open and Restricted Procedures may be used freely in any circumstances and for any type of contract covered by the Regulations. The only real change to these procedures are the shorter permissible timescales and the changes to the selection and award criteria which must be applied.

By contrast the following procedures may only be used where specific grounds for their use are met.

The Negotiated Procedure Without Prior Publication may only be applied when the justification for its use is within one of the nine distinct situations set out in the Regulations, and should only be used where the other procedural options have been exhausted.

Minimum Timescales

(Further information is provided on the procedures highlighted in blue cells below, on the following pages):

Prior Information Notices & timescales

PINs can be used in most tendering situations where there is sufficient time, however, where they are being used to shorten the minimum procedural time limits they must be sent for publication between 35 days and 12 months before the date on which the contract notice is sent.

Minimum Timescales (continued)

Open Procedure

• Minimum 35 days or 30 days where tenders submitted electronically

Open Procedure – with publication of a compliant Prior Information Notice

• PIN must be dispatched between 35 days and 12 months before contract notice sent to OJEU
• Dispatch contract notice to OJEU
• Minimum 15 days

Open Procedure – with a duly substantiated state of urgency

• Minimum 15 days

Restricted Procedure

• Minimum 30 days
• Deadline for request to participate and submission of selection stage information
• Dispatch invitation to tender to selected candidates
• 30 days (or 25 days for electronic submission). Option for all specific categories of sub-central contracting authorities to agree time limit with candidates, default of at least 10 days where no agreement

Restricted Procedure – with publication of a compliant PIN

• Dispatch PIN between 35 days and 12 months before contract notice sent to OJEU
• Minimum 30 days
• Closing date for request to participate and submission of selection stage information
• Dispatch invitation to tender to selected candidates
• Minimum 10 days. Option for all or specific categories of sub-central contracting authorities to agree time limit with candidates, default of at least 10 days where no agreement

Restricted Procedure – use
of a PIN as a call
for competition

• Dispatch PIN as a call for competition to OJEU between
  35 days and 12 months before sending invitation to confirm interest
• Following the deadline to express an interest, simultaneously invite the candidates to confirm their interest
• Minimum 30 days
• Closing date for confirmation of interest and submission of selection stage information
• Dispatch invitation to tender to selected candidates
• 30 days (or 25 days for electronic submission). Option for all or specific categories of sub-central contracting authorities to agree time limit with candidates, default of at least 10 days where no agreement

Restricted Procedure – with duly substantiated state of urgency

• Minimum 15 days
• Closing date for request to participate and submission of selection stage information
• Dispatch invitation to tender to selected candidates
• Minimum 10 days. Option for all or specific categories of sub-central contracting authorities to agree time limit with candidates, default of at least 10 days where no agreement

Competitive Procedure with Negotiation

• Minimum 30 days
• Deadline for request to participate and submission of selection stage information
• Invitation to submit initial tenders
• 30 days (or 25 days for electronic submission). Option for all or specific categories of sub-central contracting authorities to agree time limit with candidates, default of at least 10 days where no agreement
• Deadline for receipt of initial tenders
• Determine whether to award the contract based on the initial tenders or whether to continue with negotiation
• No statutory timescales for negotiation phase(s)
• Tenderers informed that the contracting authority intends to conclude negotiations and are invited to submit any new or revised tenders
• No minimum period specified. Common period to be set for all tenderers
• Deadline for receipt of tenders

Competitive Procedure with Negotiation – with publication of a compliant PIN

• Dispatch PIN between 35 days and 12 months prior to sending contract notice to OJEU
• Minimum 30 days
• Deadline for request to participate and submission of selection stage information
• Invitation to submit tenders
• Minimum 10 days. Option for all or specific categories of sub-central contracting authorities to agree time limit with candidates, default of at least 10 days where no agreement
• Deadline for receipt of initial tenders
• Award the contract based on initial tenders or invite tenderers to negotiate
• No statutory timescales for negotiation phase(s)
• Tenderers informed that the contracting authority intends to conclude negotiations and are invited to submit final tenders
• Deadline for receipt of final tenders

Competitive Procedure with Negotiation - with PIN as a call for competition

• Dispatch PIN as a call for competition to OJEU between
  35 days and 12 months before sending initiation to confirm interest
• Following the deadline to express an interest, simultaneously invite the candidates to confirm their interest
• Minimum 30 days
• Deadline for confirmation of interest and submission of selection stage information
• Dispatch of invitation to submit initial tender to successful candidates
• 30 days (or 25 days for electronic submission). Option for all or specific categories of sub-central contracting authorities to agree time limit with candidates of at least 10 days where no agreement
• Deadline for receipt of initial tenders
• Award the contract based on initial tenders or invite tenderers to negotiate
• No statutory timescales for negotiation phase(s)
• Tenderers informed that the contracting authority intends to conclude negotiations and are invited to submit final tenders
• Deadline for receipt of final tenders

Competitive Procedure with Negotiation - with duly substantiated state of urgency

• Minimum 15 days
• Closing date for request to participate and submission of selection stage information
• Dispatch of invitation to submit initial tender
• Minimum 10 days. Option for all or specific categories of sub-central contracting authorities to agree time limit with candidates, default of at least 10 days where no agreement
• Closing date for receipt of initial tender
• No statutory timescales for negotiation phase(s)
• Tenderers informed that the contracting authority intends to conclude negotiations and are invited to submit final tenders
• Closing date for receipt of final tenders

Competitive Dialogue

• Minimum 30 days
• Closing date for request to participate and submission of selection stage information
• Contracting authority invites selected candidates to participate in the dialogue
• No minimum period specified. Several stages of dialogue may be undertaken to reduce the number of solutions
• Declaration that dialogue is concluded. Invitation to submit final tenders
• No minimum period specified
• Deadline for receipt of final tenders
• Tenders may be clarified, specified or optimised but this must not involve the essential aspects or distort competition

Innovation Partnership

• Minimum 30 days
• Deadline for request to participate and submission of selection stage information
• Invite 1 or 3 or more selected innovation partners
• No minimum period specified for multiple mini tender stages may be undertaken to develop and reduce the number of solutions. Option to terminate after each stage
• Invite partners to submit final tenders. No minimum period specified.
• Evaluate final solutions and terminate the partnership or award the contract
• If contract is awarded manage supply of goods, works or services

Concession Minimum Timescales

• The minimum time limit for the receipt of applications whether or not including tenders for a concession shall be 30 days from the date on which the concession notice was sent.
• However if the procedure is to take place in successive stages the minimum time limit for the receipt of initial tenders shall be 22 days from the date on which the invitation to tender is sent.
• These minimum time limits can be shortened by 5 days where tenders may be submitted by electronic means.
• Concession award notices on the results of the concession award procedure must be sent not later than 48 days after the award of the concession.
• It should be noted that the Concessions Contracts Regulations do not prescribe detailed procedures, but do include general principles and procedural guarantees relating to specifications, selection and award criteria, and providing information to the candidates and tenderers.

Procurement Procedures

Open Procedure

In the open procedure public bodies are permitted to evaluate tenders before applying the selection stages, exclusion grounds and criteria. However, if a public body chooses to do this, they must ensure that no grounds for exclusion apply to the winning tenderer and that they meet the selection criteria.

This must be carried out in an impartial and transparent manner to ensure that no contract is awarded to a tenderer who should have been excluded or who does not meet the selection criteria.

Competitive Procedure with Negotiation ( CPN)

The Competitive Procedure with Negotiation ( CPN) replaces the old negotiated procedure with prior publication for the public sector (whereas the negotiated procedure remains in place for the utilities sector).

The major difference between the CPN and the negotiated procedure with prior publication is the greater ease with which its use may be justified by public bodies.

The CPN permits limited negotiation but this must not involve the minimum requirements or the award criteria and must not distort competition. These requirements must be detailed enough for a potential supplier to work out whether they should bid or not. In addition, certain elements of the restricted procedure must be applied to the negotiated procedure. Lastly, if a public body is wishing to award the contract on the basis of the initial tenders without negotiation then it must reserve the possibility of doing so in the contract notice or the invitation to confirm interest.

Competitive Procedure with Negotiation or Competitive Dialogue?

As these procedures are now able to be justified in the same way, procurers will have to determine which of them best meets their needs.

→

Competitive Procedure with Negotiation ( CPN) general structure					Award
Selection Stage	Initial/Final Tender	Talk	Talk	New or Revised Tender

→

Competitive Dialogue ( CD) general structure						Award
Selection Stage	Talk	Talk	Talk	Tender	Clarification Specification Optimisation

The CPN requires the development of a specification of its requirements in advance of inviting submissions from bidders, and to structure the negotiation around those requirements. It is likely that many procurers will opt for the CPN where they have a clearer idea of the possible solution. In contrast, the CD simply requires that procurers identify their needs without having to prescribe the nature, characteristics or solutions to be offered.

Following the selection stage, the CPN requires procurers to conduct an initial tender stage. Public bodies may award contracts on the basis of these initial tenders where they have reserved the possibility of doing so in the contract notice (or the invitation to confirm interest). If the contract is not awarded at this stage, there may be multiple stages of negotiation/dialogue (based on the bidder’s initial tender) with this process culminating in a new or revised tender and then the award of a contract.

Clarification, specification and optimisation (or additional information) may be provided following a request by a public body. However, this information may not involve changes to the essential aspects of the tender or the procurement. This includes the needs and requirements set out in the contract notice or in the descriptive document, where such changes are likely to distort competition or cause discrimination e.g. final planning permission where required for a large build or getting a quote from a financial market to ascertain an up to date cost for financing a large project.

Once the selection stage is complete, CD permits multiple dialogue stages (to be set by the public body) during which the number of solutions may be reduced (where they have reserved the possibility of doing so in the contract notice or descriptive document). Once the public body has identified the solutions which are capable of meeting its needs, they may declare that the dialogue has been concluded and ask the bidders to submit their final tenders, following which there may be clarification, specification and optimisation of the preferred bidder’s final tender.

CD is most useful in situations where the public body knows what outputs or outcomes they want but not necessarily how they might achieve them. Therefore procurements involving innovative projects, the implementation of major integrated transport infrastructure projects, large computer networks or projects involving complex and structured financing can all fit well with CD. Following selection, the CD process is aimed at the parallel development of solutions and culminates with the final tender which can be clarified, optimised or fine-tuned prior to contract award.

Use of Competitive Procedure with Negotiation or Competitive Dialogue

Public bodies may apply a Competitive Procedure with Negotiation or a Competitive Dialogue with regard to works, supplies or services fulfilling one or more of the following criteria:

a) the needs of the public body cannot be met without adaptation of readily available solutions;

b) they include design or innovative solutions;

c) the contract cannot be awarded without prior negotiations because of specified circumstances related to the nature, the complexity of the contract, the legal and financial make-up or because of the risks attaching to any of them;

d) the technical specifications of the contract cannot be established with sufficient precision by the public body with reference to a standard, European Technical Assessment, common technical specification or technical reference.

In addition, public bodies may now apply a Competitive Dialogue procedure with regard to works, supplies or services in response to an open or a restricted procedure where only irregular or unacceptable tenders are submitted.

In such situations contracting authorities shall not be required to publish a contract notice where they include in the procedure all of, and only, the tenderers which satisfy the criteria set out in regulations 57 to 64 (criteria for qualitative selection) of the Public Contracts (Scotland) Regulations 2015 and which, during the prior open or restricted procedure submitted tenders in accordance with the formal requirements of the procurement procedure.

• Examples of irregular tenders are those which are late, where there is evidence of collusion or corruption or those which are abnormally low.
• Examples of unacceptable tenders are those where the tenderers do not have the required qualifications, tenders where the price exceeds the public body’s budget as determined and documented prior to the launching of the procurement procedure.

Innovation Partnership

Under the Public Contracts (Scotland) Regulations 2012 public bodies faced a practical problem: they may well have been able to justify awarding a research and development contract without competition. However, if the outcome was a useful product, service or works they may have been unable to purchase this directly from the developer without further competition.

The Innovation Partnership aims to resolve this issue by combining the following components in to one procedure:

• the appointment of one or several partners conducting separate research and development activities;
• parallel and innovative development work as well as permitting the number of partners to be reduced; and
• an option for the public body to purchase the innovative supplies, services or works developed as a result of the Innovation Partnership.

The Regulations define "innovation" as “the implementation of a new or significantly improved product, service or process, including but not limited to production, building or construction processes, new marketing method, new organisational method in business practices, workplace organisation or external relations inter alia with the purpose of helping to solve societal challenges or to support the Europe 2020 strategy for smart, sustainable and inclusive growth”.

It is important to understand that innovation partnerships may only be used where there is a need for the development of an innovative product, service or works which is not already available on the market:

• While an innovative solution is the objective, this outcome must meet the minimum requirements set out in the procurement documents and be within the agreed performance levels and maximum costs.
• The information provided shall be sufficiently precise to enable economic operators to identify the nature and scope of the required solution and decide whether to request to participate in the procedure.
• It should be noted that the recitals state that public bodies should not use innovation partnerships in such a way as to prevent, restrict or distort competition.

Public bodies should be careful when setting minimum requirements as these have the potential to restrict their ability to take advantage of innovative proposals. This could occur where an authority does not know as much about the potential solutions to their requirement as the market and their minimum requirements have the effect of restricting innovation and therefore competition.

Public bodies may set up an innovation partnership, with one or several partners, conducting separate research and development activities with the aim of developing an innovative product service or works and their subsequent supply, provided that they correspond to the performance levels and maximum costs agreed between the public bodies and the participants. The innovation partnership shall be structured in successive stages, following the sequence of steps in the research and innovation process, and shall set intermediate targets to be attained by the partners and provide for payment in appropriate instalments.

Where there are sufficient partners, a public body may conduct a staged reduction based on those targets, as long as they have indicated those possibilities and the conditions for their use in the procurement documents.

Public bodies shall negotiate with tenderers to improve the content of the initial and all subsequent tenders submitted by them, except for the final tenders. In addition this negotiation should not be based on the minimum requirements or the award criteria. The procurement documents shall indicate the regime applicable to intellectual property rights.

Just as with the Competitive Procedure with Negotiation and the Competitive Dialogue Procedure, public bodies must ensure the equal treatment of all tenderers and part of this requires that confidentiality must be maintained to prevent any distortion of competition. Information must not be divulged without the express permission of the tenderer and this permission shall only be given with reference to the intended communication of specific information.

Phase One

Award procedure conducted in accordance with the Regulations to choose the partner or partners that will subsequently participate in the innovation phase of the awarded contract.

Phase Two

After contract award the final elements of the contract may be developed through technical dialogue prior to contract execution. It should be noted that this should not involve the minimum requirements or the award criteria.

Phase Three

Following the outcome of the innovation phase, phase three concerns the placing of orders for the purchase of the goods, works or services constituting the outcome of the innovation phase.

Use of the Negotiated Procedure without Prior Publication

While this procedure remains largely unchanged, the wording has been clarified to explain more clearly when this procedure can be used where an open or restricted procedure fails.

A tender shall be considered not to be suitable where it is irrelevant to the contract, being manifestly incapable, without substantial changes, of meeting the public body’s needs and requirements as specified in the procurement documents.

A request for participation shall be considered not to be suitable where an economic operator is to be or may be excluded based on the mandatory or discretionary exclusion criteria or where it does not meet the selection criteria set out by the public body pursuant to the Regulations.

Public bodies must publish a contract award notice in OJEU within 30 days of awarding the contract, if the procurement is caught by the Public Contracts (Scotland) Regulations 2015 and is above the advertising thresholds.

QUIZ

Question 13

Where a public body engages with the market without prescribing

the nature, characteristics or solutions to be offered, which of

these procurement procedures is designed for use within these circumstances? (please select one answer):

a) Competitive Dialogue

b) Competitive Procedure with Negotiation

c) Open Procedure.

Question 14

A public body is seeking an innovative product, service or works

(above the EU Thresholds) and has determined that this cannot

currently be met by the market. Does it… (please select one answer):

a) Consider entering into exclusive discussions with one supplier?

b) Consider an Innovation Partnership to research and develop innovative

solutions with option to procure the eventual solution?

c) Consider deferring the procurement?

Question 15

Innovation Partnerships may be used where… (please select all that apply):

a) There is a need to expand the number of suppliers providing an existing

solution that aims to deliver above target savings

b) There is a need for the development of an innovative product, service or

works and that the subsequent purchase of these cannot be met by solutions

already available on the market

c) There is a need for the development of an innovative product, service or

works, currently available on the market.

Question 16

In an Open Procedure, under the new Public Contracts (Scotland) Regulations 2015, selection stage exclusion grounds may… (please select one answer):

a) Be applied before examining tenders

b) Be applied after examining tenders.